A taskforce charged with addressing poor socioeconomic diversity at the most senior levels of the UK’s financial and professional services sector has outlined practical steps to boost the number of leaders from a working class background.
A report published today by the City of London Corporation-led Socioeconomic Diversity Taskforce is also urging the implementation of a sector-wide goal to ensure at least half of senior leaders in the UK financial and professional services sector come from a working class or intermediate background by 2030.
It follows concerns about the huge imbalances in the career progression and salaries of those from working class backgrounds at the most senior levels.
While around half of all employees in the sector are from non-professional backgrounds, defined as working class and intermediate backgrounds, these employees progress 25% slower than their peers and only 36% of working class and intermediate employees have climbed the ladder to senior levels. Meanwhile, employees from non-professional backgrounds are also likely to get paid up to £17,500 less per year – with zero link to job performance.
ICAEW Chief Executive Michael Izza, who sits on the taskforce’s steering committee, said collecting and monitoring data on socioeconomic background, in the same way we have on gender and ethnicity for many years, plays an important role in achieving these goals.
“Greater diversity at the top is key to developing an inclusive culture, where people progress on merit irrespective of their background. I encourage all organisations – in professional services and beyond – to read this report and use its practical guidance to examine each stage of an individual’s journey with the intention of identifying and removing systemic bias and supporting those from disadvantaged backgrounds.”
Izza said the inclusivity of organisations was not just a moral imperative, but also an economic one. “As well as helping us understand and support each other, it improves productivity and competitive advantage, and breeds innovation,” he said.
A separate report – a first of its kind – also published today highlights the business benefits of increased socioeconomic diversity at senior levels in UK financial and professional services. In particular, it looks at the positive benefits of socioeconomic diversity, particularly at senior levels, on productivity, innovation, talent, intersectionality and licence to operate.
Evidence suggests that the profits of organisations focusing on socioeconomic diversity are 1.4 times higher than their competitors, the taskforce says.
“ICAEW is committed to improving social mobility in the UK, and through initiatives such as Rise and Access Accountancy we are helping young people recognise their talents and their future career prospects,” Izza said.
The taskforce’s final report outlines a pathway for firms to level the playing field and boost representation at senior levels of the sector.
Data held by the taskforce shows that 37% of senior leaders in the UK financial and professional services sector are currently from non-professional backgrounds. The target of boosting this level to 50% of senior leaders by 2030 will be reviewed in 2025 to ensure it remains representative and achievable. By this time, the taskforce expects all organisations in the sector to have started to collect data on the socio-economic background of their employees, which will provide a better-informed baseline.
The report also includes recommendations on how regulators, sector bodies and government can support and incentivise employer action on this journey. At an employer level, that includes assigning clear accountability and responsibility to senior leaders, monitoring which of their actions to increase socio-economic diversity works, publishing data and highlighting successful outcomes.
The recommendations are based on extensive research, case studies from leading employers and recommendations from organisations including the Social Mobility Commission, Social Mobility Foundation, Sutton Trust, Social Mobility Business Partnership and Bridge Group.
Chair of the Socioeconomic Diversity Taskforce, Catherine McGuinness, said UK financial and professional services firms needed to act now to enable talented people to rise to the top whatever their background.
“We need to break the ‘class ceiling’ – removing unfair barriers to progression is not only the right thing to do, it will enable firms to boost productivity, retention levels and innovation. Using this practical guidance and setting ourselves stretching goals, we can bring about change, ensuring a fairer and more equitable sector for all,” McGuinness said.
The taskforce is also calling for UK financial services firms of all sizes to join the newly launched membership body, Progress Together. The body is the first of its kind to focus on progression and retention to improve socio-economic diversity at senior levels in the financial services sector.
Co-Chair of the Socio-Economic Diversity Taskforce, Andy Haldane, said: “We cannot grow as a country unless people grow. For too long, personal growth has been constrained by people’s socio-economic background. Today’s recommendations signal a break from the past, with financial and professional services playing a leading role in unleashing the potential in people, organisations and the economy at large.”
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